Offshore Banking

Offshore banking is banking activity that is conducted through financial establishments that is located in a tax haven or an offshore financial center. Offshore banking has many benefits to its beneficiaries, and does have these few characteristics:

  • The account holder, individual or company cannot be a resident of the country in which the bank is located.
  • Deposits may not originate in the country where the bank is located.
  • Capital gains or interest earned is exempted from taxes.

Offshore banking is accessible to any individual or company that meets the nominal requirements of:

  • For individual accounts- Notarized valid copy of ID (preferably passport) for each signatory, declaration of source of funds, proof of address.
  • For corporate accounts- Notarized copy of company’s incorporation documents, notarized copies of identification for all directors, shareholder and beneficiaries, report of expected source of fund, and expected activity, proof of address for all parties and legal document showing appointment of bank officials

One requirement for an offshore bank account which maybe a hindrance in some jurisdictions is the amount of money required for deposit. Fortunately, there are many offshore banks that will open an offshore bank account for as little as US1000.00, but there are some banks especially banks that offer private banking, which require deposit upwards of US500, 000. Most offshore banks are complying with the Know Your Customer international banking due diligence process. Through this process, an in-depth check is conducted on all participants on the application and checked for criminal background, terrorist funding, money launderings, etc. This is in an effort to maintain the integrity of offshore financial centers and institutions.

The St. Kitts Citizenship Program requires the applicant to make an investment of a certain amount towards a government approved real estate project. This second passport program is well regulated. Application fees are structured based on if application is from a family applicant or a single applicant for which this second passport program is designed. Anyone who is looking to get a second citizenship for St. Kitts and Nevis can also do so by making a single contribution to the Sugar Industry Diversification Foundation, while in Dominica can apply under economic citizenship program for which back ground checks are necessary. Meanwhile, offshore companies are legal business companies which are incorporated in offshore jurisdictions hence the name offshore companies, IBCs or offshore corporations. In some countries offshore corporations are known as non-resident corporations or companies. Offshore structures may generally take the form of LLCs or Limited Partnerships, as well as offshore trusts and offshore foundations which are tax free offshore solutions.

It is sometime necessary to get a bank introduction for the bank to consider the application of person, and the role of offshore service providers as intermediates is almost required. But some intermediary will not offer bank account opening and introduction for individuals, and will do so only for companies that have been incorporated by them. Lastly, some banks will not offer offshore banking solutions for individual bank accounts.

Offshore banking with an offshore account is an invaluable tool for companies and individuals alike if the objective is any one or more of the followings:

  • Asset and wealth protection
  • estate and inheritance (tax) planning
  • more competitive interest rates and better returns
  • reduced taxes and tax planning
  • opportunity to engage in and exploit international business interests in low to no taxation jurisdictions
  • Global access to assets and income.
  • Multicurrency banking
  • Flexible bank account structure
  • Legislatively supported privacy and confidentiality

Offshore banking is an attractive feature that can enhance an individual or corporate portfolio, while providing further benefits in the form of savings through low or no tax policies. However, even though confidentiality and privacy on accounts is held sacred, many offshore banking establishments (by jurisdiction) have agreements with countries where specific applications and account activities are reported on, or taxes are held from those account. The EU Tax Savings Directive is just one such agreement where members of the EU union are to either report on accounts that are held by individual (not companies) EU resident or withhold the taxes paid on interest.

There are other such agreement and double tax treaties between various countries which may or may not affect the overall benefit of your offshore banking account, so be wise and do as much due diligence on the bank as is done on you before choosing an offshore ba